Oil dropped 3 percent yesterday as Edouard's wind speed eased concern that offshore and platforms would be damaged by the storm. The Reuters/Jefferies CRB Index of 19 commodities had its biggest one-day decline yesterday since March.
Crude oil for September delivery fell as much as $1.41, or 1.2 percent, to $120 a barrel in electronic trading on the New York Mercantile Exchange, and traded at $120.11 at 2:22 p.m. Singapore time. Yesterday, crude oil dropped $3.69 to settle at $121.41 a barrel in New York, the lowest close since May 5.
Tropical storm Edouard had maximum sustained winds of about 60 miles (97 kilometers) per hour at 10 p.m. Houston time, from 45 miles an hour earlier, the National Hurricane Center in Miami said in an advisory on its Web site. The system was 160 miles east-southeast of Galveston, Texas, and moving west-northwest at about 8 miles an hour. It may reach near-hurricane strength as it nears land, the center said.
When Hurricanes Katrina and Rita, both Category 5 storms, devastated New Orleans and the U.S. Gulf's oil output and refineries in August, and September 2005, they had wind speeds of more than 155 miles an hour. The Gulf accounts for about a fifth of U.S. oil production.
Oil had reached a record $147.27 a barrel on July 11 because of a weaker dollar and concern supply from Nigeria and the Middle East may be disrupted.
The commander of Iran's Islamic Revolutionary Guards Corps, Brigadier General Mohammad-Ali Ja'fari, announced new anti-ship weapons test yesterday on state-run news services. He also reiterated a warning that Iran could respond to any attack by closing the Strait of Hormuz, through which a quarter of the world's oil is exported.
Gasoline futures fell to a three-month low on speculation Tropical Storm Edouard won't do much to disrupt crude oil operations or refining along the Texas and Louisiana coasts.
Gasoline for September delivery in New York dropped 2.11 cents, or 0.7 percent, to $2.9790 a gallon at 1:22 p.m. Singapore time. Yesterday, the contract declined 8.41 cents, or 2.7 percent, to settle at $3.0002 a gallon on the New York Mercantile Exchange, the lowest close since May 2.
The Louisiana oil port, the biggest U.S. crude import terminal, is ``continuing to make pipeline deliveries,'' said Barb Hestermann, a spokeswoman. ``We don't anticipate being shut down very long. As soon as sea conditions improve, we will start off-loading.''
U.S. producers have idled less than 1 percent of oil output and 7.2 percent of natural gas production in the Gulf of Mexico because of Tropical Storm Edouard, the U.S. Minerals Management Service said.
Inventories of crude oil increased 250,000 barrels in the week ended Aug. 1 from 295.2 million, the survey showed. U.S. inventories have fallen in nine of the past 11 weekly government supply reports.
Brent crude oil for September settlement fell as much as $1.38, or 1.1 percent, to $119.30 a barrel on London's ICE Futures Europe exchange and traded at $119.39 at 2:24 p.m. Singapore time.